5 things you must know about depository receipts

1.Depository receipts are financial instruments that represent shares of a foreign company.
2.Depository receipts trade in the local market in which these are issued, and are denominated in local currency.
3.A company delivers equity shares to a bank that places the security in its custodian account in the domicile country. The bank then issues DRs against such shares in the overseas market.
4.The companies that want their DRs to be listed must apply for listing as per the local guidelines.
5.Indian firms are permitted to raise foreign currency via DRs and foreign firms can also raise equity capital from India through IDRs.


Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.